Tk60,000 Crore Rescue Package
Bangladesh Bank has struck deals with 17 banks to fund a huge rescue plan for shut-down factories, but experts warn the move could clash with international loan rules and hide risks in a weak banking system.
In a Nutshell:
- Bangladesh Bank announced a Tk60,000 crore rescue fund on 23 May 2026 to reopen closed factories and get the economy moving again.
- Banks will give Tk41,000 crore of this money, while Bangladesh Bank itself will add the remaining Tk19,000 crore from its own funds.
- On 27 August 2026, 17 banks signed agreements to provide that Tk41,000 crore: Sonali, Agrani, Rupali, BRAC, City, Jamuna, Dutch-Bangla, Mutual Trust, Uttara, Prime, Bank Asia, National Credit and Commerce, Pubali, Eastern, Mercantile, Trust, and Southeast.
- The biggest chunk, Tk20,000 crore, is set aside just for reopening factories that have been shut for a long time.
- Businesses will borrow this money at about 7 to 7.5% interest, while Bangladesh Bank pays the 17 banks close to 10% for lending it.
Context
The rescue plan began in May 2026 after Bangladesh's economy slowed due to high prices and businesses' reluctance to borrow. Seven banks joined first in mid-August, and now 17 have signed on, with even more banks expected to join later. Money is supposed to start reaching businesses from 1 September 2026.
Why it matters
This rescue plan comes at a tricky time. The IMF is holding back nearly $4.7 to 5.5 billion in loans to Bangladesh, insisting the government stop this kind of easy lending and first clean up a banking system where almost 1 in 3 loans is already bad debt. Dr Zahid Hussain, a former World Bank economist, has warned that pumping in cheap money like this "will undoubtedly enhance inflationary risk" and could push banks to lend carelessly again, just like in the past. Prof Mustafizur Rahman of the Centre for Policy Dialogue points out that such rescue measures are only necessary because deeper problems in the banking sector remain unaddressed. There's also a fairness question. Bangladesh Bank has spent two years removing bank bosses tied to the former ruling party and a scandal-hit business group, so if any rescued factories turn out to have similar political links, it would hurt the government's promise of reform. For a government only six months in power, this plan is a real test of whether it can fix the economy without breaking its reform promises.
What we think
The government is pushing money into the economy at the same time it has promised the IMF it would pull back. This contradiction is worth watching closely. The gap between what businesses pay back (7-7.5%) and what banks are paid (nearly 10%) is a hidden cost that someone, somewhere, has to cover. Similar funds in the past, such as the Export Development Fund, were misused rather than reaching the businesses that needed them. It's still unclear whether this new money will go to genuinely struggling factories or end up with businesses that already owe banks money and haven't repaid it.